ExxonMobil's Tillerson Supports Carbon Tax

Jeannie Stell

Fri, 10/02/2009 - 03:09 PM

Meeting the world’s growing energy needs while managing the risks of climate change will require the development of all viable sources of energy and policies that support business investment and technology development, according to Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corp.. Tillerson made his comments to The Economic Club of Washington, D.C.
“Our best hope is to harness the power of new technologies and free markets to meet the world’s energy and environmental challenges,” he said. “By allowing nations and peoples to work together, we can invest in integrated solutions that expand energy supplies, increase efficiency and reduce emissions. Time and time again, our industry has proven that innovation and cooperation unleash human ingenuity and bring far-reaching technological advances that can transform the economy, protect the environment, and increase energy security.”
The challenge facing America and the world is how to ensure the availability of energy supplies required for economic growth while simultaneously addressing the risks of climate change, he said.
Tillerson said there is an advantage to implementing a revenue-neutral carbon tax as an effective policy option, compared to the shortcomings of cap-and-trade systems, which can increase price volatility and cause economic harm while failing to reduce carbon emissions.
“For businesses and industry, volatile carbon prices under cap-and-trade would undermine the ability to invest in the advanced technologies that are our best hope for expanding supplies, increasing efficiency and reducing emissions. Such an approach would also create economic inefficiencies and invite market manipulation,” he warned.
Conversely, a carbon tax is a more direct, transparent and effective approach and would be easier to apply globally while avoiding the establishment of new mechanisms for trading emissions and new regulators to monitor them, he advised.
“It is the most efficient means of reflecting the cost of carbon in all economic decisions, from investments made by companies, to fuel and product choices made by consumers. If implemented on a revenue-neutral basis, a carbon tax would ensure that government policy is specifically targeted to reduce emissions and not to creating a new revenue stream.”
However, Tillerson noted that punitive taxes targeting the energy industry are detrimental to economic growth, environmental innovation and energy security. Such policies ultimately raise energy costs for consumers and undercut America’s future by hindering ability to invest in new supplies. He pointed out that new investment is important to the American economy of the oil and gas industry, which supports more than nine million jobs and provides hundreds of billions in tax revenues for federal and state governments.
ExxonMobil, the largest publicly traded international oil and gas company, has an industry-leading inventory of resources, is the largest refiner and marketer of petroleum products, and its chemical company is one of the largest in the world.